Compensation: A Foundation Like a Ship, Not a Building

Stickman Compensation Cruise Ship

Stickman Compensation Cruise Ship

This concept came to me at a recent compensation philosophy engagement. During an employee interview session I explained that the compensation philosophy would become the foundation for new compensation programs, pay levels and strategy. The very astute employee chimed in and asked: “We have a new CEO and we're expanding into new business lines and markets. Won’t a strong foundation anchor us to where we are right now?” Historically, we tend to envision foundations as framework and pilings at the base of a building. They reach deep into the earth and provide the base for everything else we do. This employee didn’t know anything about the foundation for compensation and his question was far more insightful than most. How do we build a foundation that supports two different needs?

First, a foundation must be strong enough to support the broad needs and towering goals of a successful company. Second, it must be flexible enough to adjust and move as needed. Buildings exist like this all over the world. They are called cruise ships. These floating cities are a great metaphor for modern compensation programs.

Like any successful company, the ships are self-powered. Like a successful staff, crews can work autonomously for long periods with only each other’s support and input. Like compensation departments, they exist to attract, motivate and retain targeted people. And just like a good total rewards program, there is something for nearly everyone regardless of age, need, skill or desire. There is a captain who provides direction and oversees results. Most importantly, like most compensation programs, a vast amount of what makes the ship work is invisible to most people.

A large cruise ship may have a draft of more than 25 feet. This means that a significant portion of the ship is below the waterline. In this case, “out of sight” cannot mean “out of mind.” Just as a compensation department must understand trends and market data, a ship’s crew must be aware of their current draft and the depth of the water around them. While others play or sleep, it is the crew’s job to make sure they safely reach their destination without running aground. Capsizing is less of a risk, since these ships are built as floating foundations that can account for all but the most incredible and rare waves. Like the best compensation plans, they are designed so that even tsunamis are seldom more than a bumpy ride. The crew has a schedule, a destination and ports of call along the way to serve as milestones.

Lastly, like any good compensation program, these ships can operate nearly anywhere, regardless of climate, season, longitude or latitude. In short, they provide nearly all of the stability of a static compensation foundation, with all of the flexibility and mobility needed in today’s world.

The next few months are compensation’s season for the review and evaluation of philosophy, policy, best practices and execution. This year ask yourself if your compensation program is structured to be as flexible and mobile as your company will surely need to be over the next few years.  If not, you may want to evaluate what it will take to build a more modern and useful foundation.

BONUS QUESTION:  What cruise ship is depicted above?

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